Financial Freedom Report #53

By HRF — Dec 12, 2024

Good morning, readers!

This week, governments and financial institutions around the world advanced policies that amplify the divide between state interests and the daily economic realities of citizens. In Tunisia, President Kais Saied is once again turning to the nation’s central bank to repay its growing debts, a move that risks accelerating inflation, reducing citizen purchasing power, and increasing costs of living.

The Reserve Bank of India (RBI) is urging regional banks to enhance their Know-Your-Customer (KYC) procedures. This includes implementing a “re-KYC” process that requires millions of citizens to resubmit personal information. In addition, banks are gathering supplementary data, which may be used for marketing purposes and potentially other objectives.

In technology news, Eclair, an implementation of the Lightning Network, added support for BOLT 12 offers and liquidity management features such as splicing, liquidity ads, and on-the-fly funding. These make managing liquidity and using the Lightning Network more accessible and private. Meanwhile, Machankura, a custodial Lightning wallet in Africa with offline functionality for feature phones, announced the launch of a mobile application for Android users. This will bring offline Bitcoin transactions to a greater number of people across the African continent.

We end with the latest episode in the HRF x Pubkey Freedom Tech Series, featuring HRF’s Bitcoin Development Lead, Alex Li, in conversation with Bitcoin Core maintainer Gloria Zhao, on the threats facing Bitcoin, the importance of censorship-resistant payments, and her decision to pursue open-source, grant-funded development over corporate opportunities.

Now, let’s dive right in!

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GLOBAL NEWS

Tunisia | Turns to Central Bank to Repay Debts

In a clear display of financial manipulation, President Kais Saied is once again turning to the central bank to repay Tunisia’s surging debt. He plans to borrow 7 billion dinars ($2.2 billion), equal to about 28% of the central bank’s foreign currency reserves. This move could increase inflation in an already struggling economy where unemployment exceeds 16%, supermarket shelves run empty, and water shortages threaten families' livelihoods. Saied’s unrelenting consolidation of power — including shutting down parliament, arresting opposition leaders, and controlling the judiciary — has stalled any meaningful way for people to push back and protest the disastrous state-led economic policies.

India | RBI Pushes Banks to Re-KYC Customers

The Reserve Bank of India is urging regional banks to carry out re-KYC (Know-Your-Customer) verifications. Stringent KYC requirements and mandatory periodic updates have caused many citizens to lose access to their bank accounts. Despite repeatedly submitting their personal information to be compliant, numerous account holders continue to be locked out due to delays, errors, and overreaching requirements. Moreover, reports indicate that banks have exploited the KYC process to collect additional data from account holders for third-party marketing.

Kenya | Reinstates Tax Measures that Ignited Nationwide Protests

Kenya’s lawmakers have reinstated controversial tax measures that previously triggered nationwide protests, claiming more than 60 lives. The National Treasury, navigating escalating debts and revenue shortfalls, repackaged the taxes into three bills approved by the National Assembly. These include higher import taxes, a “top-up” tax for multinational companies, and levies on foreign firms operating via digital platforms — all part of Kenya’s “austerity” commitments to the International Monetary Fund (IMF). The reinstatement of these taxes risks reigniting public unrest and inflation, while the growing reliance on the IMF calls into question the autonomy and financial resilience of both the government and ordinary citizens.

Vietnam | Social Media Platforms Censor Anti-State Content

Over the past year, Facebook, Google, and TikTok complied with more than 90% of the Communist Party of Vietnam’s (CPV) requests to censor over 15,000 pieces of “anti-state” content. This censorship aligns with Decree 147, a law passed by the CPV to tighten control over social networks and the Internet. Amnesty International condemned these practices as arbitrary censorship. Adding to the repression, Decree 147 requires organizations to share data with authorities without consent in situations deemed critical to “national security.” Such tactics could easily compromise activists and civil society organizations. In these environments, decentralized protocols like Nostr, which allow communication and expression beyond the reach of the state, can play a vital role in upholding citizens' right to free expression.

Cuba | Nationwide Blackout Following Grid Collapse

Last week, Cuba’s largest electricity producer failed, plunging the island nation into darkness and leaving millions without power. This exemplifies the fragility of Cuba’s electrical grid in a country already battered by currency collapse and fuel shortages. Over the past year, frequent blackouts — some lasting up to 18 hours — have made it prohibitively difficult for families to feed themselves and access basic necessities. The nationwide outage forced schools to close and halted work for millions of Cubans already struggling with food, water, and medicine shortages. While officials scramble to restore power to hospitals and water facilities, this illustrates the shortfalls of a state assuming absolute control over a critical industry, like electricity, and failing to deliver. Such failures ultimately strip citizens — already mired in crisis — of basic rights and essential services.

LATEST IN BITCOIN NEWS, DEVELOPMENT, AND COMMUNITY

Eclair | Integrates Support for BOLT 12, Splicing, Liquidity Ads, and On-The-Fly Funding

Eclair, a Lightning Network implementation developed by ACINQ (the team behind Phoenix Wallet and phoenixd), introduced support for BOLT 12 offers and a host of liquidity management features, including splicing, liquidity ads, and on-the-fly funding. BOLT 12 offers increased receiver privacy and censorship resistance when making payments (as well as helping people receive payments via a static QR code or alphanumeric address), while splicing enables the adjustment of payment channels without interrupting ongoing transactions. Further, liquidity ads and on-the-fly funding make it possible for nodes to buy or sell liquidity when making payments on the Lightning Network. These features improve how people send and receive Bitcoin and manage liquidity when using applications and wallets built with Eclair.

Machankura | Launches Android App

Machankura, a custodial Lightning wallet in Africa with offline functionality for feature phones, announced the launch of a mobile application for Android. Leveraging the Unstructured Supplementary Service Data (USSD) protocol for sending text messages, Machankura enables Africans to access the Bitcoin network simply by dialing a designated number on a feature phone (or a smartphone without data), facilitating Bitcoin transactions without the need for an Internet connection. Launching a mobile app will make offline Bitcoin transactions available to more individuals, helping democratize Bitcoin access and unlock the full potential of censorship-resistant money across Africa.

Lark | New Command Line Application for USB Hardware Wallets

Lark is a new command-line application built by Craig Raw, the creator of Sparrow Wallet, designed to interact with USB hardware wallets such as COLDCARD, Ledger, and Trezor. It serves as an alternative to the widely used HWI (Hardware Wallet Interface) software library, providing users with a second option to interact with their USB hardware wallets. By improving the resilience of the Bitcoin hardware wallet ecosystem, Lark helps advance financial autonomy and censorship resistance.

WabiSabi | Major Vulnerability in Coinjoin Protocol

The Rage, an independent news publication exposing the risks of financial surveillance, disclosed a major vulnerability in the WabiSabi coinjoin protocol that allows malicious coordinators to compromise user privacy by deanonymizing transactions. Coinjoin is a privacy-enhancing method that combines multiple Bitcoin transactions into one, making it harder to trace individual payments. The vulnerability, which affects popular tools and wallets like Wasabi Wallet, Ginger Wallet, and BTCPay Server’s coinjoin plugin, enables malicious actors to link inputs and outputs during a transaction and expose user financial activity. Developers have released updates to fix the issue, and users are urged to upgrade immediately. Learn more here.

OpenSats | Renews Grants for Open Source Bitcoin Projects

OpenSats, a public nonprofit funding free and open-source Bitcoin software and projects, renewed grants for nine crucial Bitcoin projects that are expanding financial freedom around the world. Among the recipients is BTCPay Server, an open-source and non-custodial Bitcoin payment processor that enables businesses and nonprofits to easily accept Bitcoin payments. Stratum V2, a protocol that decentralizes Bitcoin mining by enabling nodes to construct their own block templates, also received funding, as well as BitAxe, a project building open-source Bitcoin mining hardware to empower individual miners.